The dollar has sold off on the news that the Federal Reserve will buy $600 billion of Treasuries over the next 8 months. It will relax its 35% self-imposed limited per security. This is in addition to the $35 billion per month it anticipated from the mortgage securities maturing. Its economic assessment and inflation assessments appear little changed.
The quick take away is that the Fed's statement and action is largely in-line with expectations, although it is hard to know. The Fed's focus still seems to be on inflation moving in the wrong direction and this is what investors will have to monitor going forward.
Our general view remains that as the uncertainty surrounding the trajectory of US fiscal and monetary policy is lifted the dollar may perform better. Short-term rates are little changed and the long-end -- the 30-year has sold off and the 10-year note has slipped a bit as well.
Disclosure: No positions
